California’s loan forgiveness programs mostly reward healthcare workers and teachers who agree to serve where the state needs them. The biggest awards go to physicians and dentists treating Medi-Cal patients (up to $300,000 through CalHealthCares) and to a broader range of health professionals working in shortage areas (up to $50,000 through the State Loan Repayment Program). Teachers can receive up to $20,000 through the Golden State Teacher Grant, and nurses have smaller programs of their own. Each program ties the money to a service commitment, and failing to complete that commitment usually means paying the money back.
A separate issue affects anyone counting on federal income-driven repayment forgiveness: the tax exclusion on forgiven balances expired at the end of 2025, so the timing of your forgiveness now matters a great deal.
Health Professional Loan Repayment
Three state-run programs handle most healthcare loan forgiveness in California. They target different professions and carry different service commitments, and in some cases you can combine them with federal Public Service Loan Forgiveness if you also work for a qualifying employer.
California State Loan Repayment Program (SLRP)
SLRP pays up to $50,000 toward educational loans for full-time health professionals who commit to at least two years at a practice site in a federally designated Health Professional Shortage Area or a Federally Qualified Health Center. A half-time option pays up to $25,000 for the same two-year term.1California Grants Portal. California State Loan Repayment Program FY 2024-2025
Eligible disciplines include primary care physicians, dentists, dental hygienists, physician assistants, nurse practitioners, certified nurse midwives, pharmacists, and mental or behavioral health providers.2California Grants Portal. California State Loan Repayment Program To qualify, you need a valid, unrestricted California license in your discipline, U.S. citizenship, no existing federal service obligations, and no outstanding federal debt judgments. Funding comes from a mix of federal and state dollars and is awarded competitively, so meeting the minimum bar does not guarantee an award.
CalHealthCares
CalHealthCares offers much larger awards: up to $300,000 in loan repayment for physicians and dentists who commit to five years of treating Medi-Cal patients. Your award matches your verified educational loan balance at the time of application, up to that cap. Across the five-year term, you must maintain a Medi-Cal patient caseload of at least 30 percent of your total encounters and stay within 10 percent of the level approved in your grant application.3Physicians for a Healthy California. CalHealthCares Dentists have an alternative Practice Support Grant that carries a 10-year service obligation.
Nursing Programs
The California Department of Health Care Access and Information (HCAI) runs two smaller programs. Registered nurses with a bachelor’s degree can receive up to $15,000 through the Bachelor of Science Nursing Loan Repayment Program for 12 months of service at a qualified facility or underserved area. Licensed vocational nurses can receive up to $8,000 through the LVN Loan Repayment Program for 12 months of full-time patient care at an eligible site.4HCAI. Loan Repayment Programs The awards are smaller, but the one-year commitment makes them workable for nurses earlier in their careers.
Golden State Teacher Grant
The Golden State Teacher Grant (GSTG) is open to students enrolled in a preparation program approved by the Commission on Teacher Credentialing who are working toward a preliminary teaching or pupil personnel services credential. Award amounts and service terms depend on your funding cohort.5California Student Aid Commission. Golden State Teacher Grant (GSTG) Program
- Cohorts 1 and 2 receive up to $20,000, or $10,000 for students at online institutions, in exchange for four years of teaching at a priority school or California State Preschool Program within eight years of finishing their preparation program.
- Cohort 3 receives up to $10,000, or $5,000 for online institutions, in exchange for two years of teaching at a priority school or preschool program within four years of finishing their program.
One feature of the GSTG is worth understanding before you accept it. If you don’t fulfill the service commitment, the grant converts into a loan you must repay with interest. Confirm which schools count as priority sites in your region before signing on, because not every California school qualifies.
The 2026 Tax Change on Forgiven Student Loans
If you’re pursuing forgiveness through a federal income-driven repayment (IDR) plan rather than a California service program, a tax rule you may be depending on has changed.
The American Rescue Plan Act temporarily excluded most forgiven student loan debt from federal taxable income, but that exclusion applied only to loans discharged through December 31, 2025. For discharges in 2026 or later, the forgiven amount is treated as cancellation of debt income. You’ll receive a Form 1099-C from your servicer and report the forgiven amount on your tax return.6Taxpayer Advocate Service. What to Know about Student Loan Forgiveness and Your Taxes
The bill can be substantial. A borrower with $80,000 forgiven after 20 years of income-driven payments could face a federal tax hit of $15,000 or more in a single year, depending on their marginal rate. Several categories of forgiveness remain tax-free regardless of year: Public Service Loan Forgiveness, Teacher Loan Forgiveness, and discharges due to death or total and permanent disability.6Taxpayer Advocate Service. What to Know about Student Loan Forgiveness and Your Taxes
California’s state exclusion mirrored the federal one and expired on the same schedule. AB 111 excluded forgiven student loan balances from California income tax for discharges after December 31, 2020, and before January 1, 2026.7California Franchise Tax Board. Bill Analysis – AB 111 Discharges in 2026 or later are potentially taxable at the state level too, unless California enacts an extension. None has been enacted as of this writing. Borrowers approaching an IDR forgiveness milestone face the prospect of federal and state tax on the same forgiven balance.
One escape valve: borrowers who are insolvent when the debt is forgiven, meaning total liabilities exceed total assets, can exclude some or all of the forgiven amount by filing IRS Form 982. The exclusion applies up to the amount by which you’re insolvent.8Internal Revenue Service. What if I Am Insolvent Borrowers who’ve spent two decades on income-driven plans often have modest assets and significant other debts, so this helps more people than you might expect. Calculate your net worth before your forgiveness processes.
Combining a State Program with PSLF
Many California healthcare workers and teachers also work for employers that qualify for federal Public Service Loan Forgiveness: government agencies, public hospitals, school districts, and qualifying nonprofits.9Federal Student Aid. Public Service Loan Forgiveness Employer Search PSLF requires 120 qualifying monthly payments on an income-driven plan, and state programs like SLRP usually pay out in lump sums, so the two programs interact in ways you should think through.
A lump sum from a state program is applied to your loan balance, but PSLF counts monthly payments, not total dollars paid. If a lump sum covers more months than remain until your next IDR recertification (or more than 12 months), the extra reduces principal without producing additional qualifying PSLF payments. That’s money spent on a balance PSLF might have forgiven for free.
The practical read: if you’re already on track for 120 PSLF payments, a state lump sum may be worth less than it looks. If your PSLF timeline is uncertain, or you’d rather clear the debt faster, the state program delivers guaranteed relief. Run both paths before committing.
Avoiding Loan Forgiveness Scams
When forgiveness programs are in the news, scam operations ramp up. A common scheme is a company that charges upfront fees to “process” your application for a federal or state program, applications you can file yourself for free.
Federal law prohibits debt relief companies from collecting fees before they’ve actually settled or resolved your debt.10Federal Trade Commission. Debt Relief Services and The Telemarketing Sales Rule – A Guide for Business Any company demanding money upfront is breaking the law. Every program described here accepts applications directly through the administering agency: the California Student Aid Commission for the Golden State Teacher Grant, HCAI for the nursing programs and SLRP, and Physicians for a Healthy California for CalHealthCares. A paid middleman will not improve your chances.